Written Commentary
CRUDE OIL
The prospect of a peace deal has drifted to the background (but could jump back into the headlines without notice) with excess supply fears from several fronts moving to the front burner. In fact, supply concerns are emanating from both short-term and long-term developments and that has clear put the word “glut” back in daily headlines. From a short-term perspective, seeing Saudi October crude oil exports reach a 2 ½ year, Russian seaborne storage surging to 155 million barrels (55% higher than at the beginning of the year) and EIA crude oil inventories holding a 3.4 million barrel surplus to year ago levels the bear camp should remain confident. It goes without saying that the market has not completely factored in a Peace dividend if a deal is struck.
PRODUCTS
Despite its potential bullish leadership capacity, ULSD has posted fresh damage on its charts with the failure to hold $2.1146 in the February contract, and that is likely to throw prices quickly down to six-month lows.
NATURAL GAS
With a fresh downside breakout and a trade to the lowest price since early 2022, the bear camp is very confident. Clearly, yesterday’s large 167 BCF weekly draw from US natural gas storage and the lowest surplus to five-year average storage levels in several years (0.9% compared to cycle highs of nearly 10%) is viewed as “old news” and that is likely the result of the “warm” US temperature forecast through December 31st.
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